EARNINGS RELEASE TEEKAY CORPORATION REPORTS FOURTH QUARTER AND ANNUAL RESULTS

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1 4 th Floor, Belvedere Building, 69 Pitts Bay Road Hamilton, HM 08, Bermuda ` EARNINGS RELEASE REPORTS FOURTH QUARTER AND ANNUAL RESULTS Highlights Fourth quarter cash flow from vessel operations of $129.4 million, up 16 percent from the previous quarter Fourth quarter adjusted net loss attributable to stockholders of of $33.3 million, or $0.45 per share (excluding specific items which increased net income by $49.1 million, or $0.67 per share) Completed offering of $450 million, 8.5 percent senior unsecured notes due 2020 and repurchased $151.1 million of existing percent senior unsecured notes due July 2011 Current consolidated liquidity of over $2.1 billion; $2.8 billion in total consolidated liquidity including prearranged newbuilding financing On March 2, 2010, Corporation agreed to sell two Suezmax tankers and one Handymax product tanker to LNG Partners Hamilton, Bermuda, March 4, Corporation ( or the Company) (NYSE: TK) today reported an adjusted net loss attributable to stockholders of (1) of $33.3 million, or $0.45 per share, for the quarter ended, compared to adjusted net income of $53.2 million, or $0.73 per share, attributable to the stockholders of for the same period of the prior year. Adjusted net income (loss) attributable to stockholders of excludes a number of specific items which had the net effect of increasing net income by $49.1 million (or $0.67 per share) for the three months ended and decreasing net income by $704.1 million (or $9.71 per share) for the three months ended 2008, as detailed in Appendix A to this release. Including these items, the Company reported on a GAAP basis, net income attributable to the stockholders of of $15.9 million (2), or $0.22 per share, for the quarter ended, compared to net loss attributable to the stockholders of of $650.9 million (2), or $8.98 per share, for the same period of the prior year. Net revenues (3) for the fourth quarter of were $448.9 million, compared to $611.6 million for the same period of the prior year. For the year ended, the Company reported an adjusted net loss attributable to stockholders of of $87.5 million, or $1.20 per share, compared to adjusted net income attributable to stockholders of of $285.3 million, or $3.94 per share, for the same period of the prior year, excluding a number of specific items which had the net effect of increasing net income by $202.0 million (or $2.77 per share) in and decreasing net income by $754.8 million or $10.42 per share in 2008, as detailed in Appendix A to this release. Including these items, the Company reported, on a GAAP basis, net income attributable to the stockholders of of $114.5 million, or $1.57 per share for the year ended, compared to net loss attributable to the stockholders of of $469.4 million, or $6.48 per share, for the same period of the prior year. Net revenues for the twelve months ended were $1.9 billion compared to $2.5 billion for the prior year. On January 5, 2010, the Company declared a cash dividend on its common stock of $ per share for the quarter ended. The cash dividend was paid on January 29, 2010, to all shareholders of record on January 15, (1) Adjusted net income (loss) attributable to stockholders of is a non-gaap financial measure. Please refer to Appendix A to this release for a reconciliation of this non-gaap measure as used in this release to the most directly comparable financial measure under United States generally accepted accounting principles (GAAP) and information about specific items affecting net income which are typically excluded by securities analysts in their published estimates of the Company s financial results. (2) Effective January 1,, amended the accounting and reporting for non-controlling interest, which is now classified as a component of equity. (3) Net revenues represents revenues less voyage expenses, which comprise all expenses relating to certain voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Net revenues is a non-gaap financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company s web site at for a reconciliation of this non-gaap measure as used in this release to the most directly comparable financial measure under GAAP. 1

2 Commenting on s results, Bjorn Moller, s President and Chief Executive Officer stated: The contribution from our growing fixed-rate businesses proved particularly valuable during the second half of, providing cash flow stability through one of the most volatile spot tanker markets in decades Mr. Moller continued, In the fourth quarter, generated over $129 million of cash flow from vessel operations, despite the spot tanker market weakness that persisted through most of the quarter. We expect 2010 will bring continued tanker market volatility; however our fixed-rate offshore, liquefied gas and conventional tanker businesses will provide with a significant base of stable cash flows while our spot-traded fleet retains the potential upside to the spot tanker market. Mr. Moller continued, We have made great progress in on the key priorities we communicated at our June investor meeting. Since that time, we have continued to reduce our exposure to the spot tanker market through selling and chartering-out spot-trading tankers and re-delivering in-chartered vessels. The re-delivery of spot in-chartered vessels alone has resulted in quarterly cost savings of over $85 million for the fourth quarter of compared to the fourth quarter of In addition, our focus on cost management has resulted in significant savings in overhead and vessel operating expenses. At the same time, our unique corporate structure and strategy of selling assets to our three daughter public companies has enabled accretive growth at our daughter companies while achieving our objective of reducing net debt at the parent level. Through vessel sales to third parties and our daughter companies, as well as cash flow from operations, parent s total net debt and newbuilding commitments were reduced by over $600 million in during. Mr. Moller added, enters 2010 financially well-positioned with over $2.8 billion of total consolidated liquidity, including a fully-financed newbuilding program, with a favorable debt maturity profile with no significant near-term maturities, and with no current debt covenant concerns. Our successful $450 million bond offering completed in January 2010 has extended the maturity of a significant portion of our debt, which provides with greater financial flexibility going forward. In 2010, our key priorities include continuing to reduce net debt at the parent company level and to improve our profitability. We have been able to achieve substantial cost savings during and our focus in 2010 will be to sustain those cost savings while also achieve higher revenues, particularly in our offshore segment. Operating Results The following tables highlight certain financial information for each of s four publicly-listed entities: Offshore Partners L.P. ( Offshore) (NYSE: TOO), LNG Partners L.P. ( LNG) (NYSE: TGP), Tankers Ltd. ( Tankers) (NYSE: TNK) and, excluding results attributed to Offshore, LNG and Tankers, referred to herein as Parent. A brief description of each entity and an analysis of its respective financial results follows the tables below. Please also refer to the Fleet List section below and Appendix B to this release for further details. (in thousands of U.S. dollars) Offshore Partners LP LNG Partners LP Three Months Ended * Tankers Ltd. Parent Consolidation Adjustments Corporation Consolidated Net revenues (1) 178,775 85,130 25, ,924 (44,137) 448,919 Vessel operating expenses (1) 61,642 20,837 9,244 72, ,218 Time-charter hire expense 28, ,074 (44,137) 81,078 Depreciation and amortization 44,984 20,010 7,493 42, ,975 Cash flow from vessel operations (2)(3) (4) 73,230 60,392 14,528 (18,740) (4) - 129,410 Net debt (5) 1,573,867 1,419, , ,705-4,165,620 * Please see footnotes below the table on the following page. 2

3 (in thousands of U.S. dollars) Offshore Partners LP LNG Partners LP Three Months Ended 2008 Tankers Ltd. Parent Consolidation Adjustments Corporation Consolidated Net revenues (1) 189,199 87,412 36, ,989 (45,336) 611,617 Vessel operating expenses (1) 58,237 20,414 9,829 81, ,431 Time-charter hire expense 34, ,129 (45,336) 166,645 Depreciation and amortization 40,669 20,113 7,017 38, ,902 Cash flow from vessel operations (2)(3) 65,346 54,212 22,288 57,327 (4) - 199,173 Net debt (5) 1,434,948 1,439, ,130 1,128,971-4,305,412 (1) Commencing in and applied retroactively, the gains and losses related to non-designated derivative instruments have been reclassified to a separate line item in the Statements of Income (Loss) and are no longer included in the amounts above. (2) Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, vessel/goodwill writedowns, gains and losses on the sale of vessels and unrealized gains and losses relating to derivatives, but includes realized gains and losses on the settlement of foreign currency forward contracts. Cash flow from vessel operations is a non-gaap financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company s Web site at for a reconciliation of this non-gaap measure as used in this release to the most directly comparable GAAP financial measure. (3) Excludes the cash flow from vessel operations relating to assets acquired from Parent for the periods prior to their acquisition by Offshore, LNG and Tankers, respectively, as those results are included in the historical results for Parent. (4) In addition to Parent's cash flow from vessel operations, Parent also received dividends/distributions from daughter public companies of $42.3 million and $50.7 million for the three months ended and 2008, respectively. The dividends/distributions received by Parent include those made with respect to its general partner interests in Offshore and LNG and its 49% interest in Offshore Operating L.P., which is controlled by Offshore. (5) Net debt represents current and long-term debt less cash and, if applicable, current and long-term restricted cash. Offshore Partners L.P. Offshore is an international provider of marine transportation and storage services to the offshore oil industry. Through its 51 percent ownership interest in Offshore Operating L.P. (OPCO), Offshore operates a fleet of 33 shuttle tankers (including seven chartered-in vessels), four floating storage and offtake (FSO) units, nine conventional oil tankers and two lightering vessels. Offshore also has direct ownership interests in two shuttle tankers, one FSO unit, one floating, production, storage and offloading (FPSO) unit and has the right to participate in certain other FPSO opportunities. As at, Parent directly owned the remaining 49 percent interest in OPCO, as well as a percent interest in Offshore (including the two percent sole general partner interest). Cash flow from vessel operations from Offshore increased to $73.2 million in the fourth quarter of, from $65.3 million in the same period of the prior year. This increase was primarily due to the acquisition from of the Petojarl Varg FPSO in September as well as lower time-charter hire expense as a result of a reduced in-chartered fleet, partially offset by lower shuttle tanker fleet utilization. LNG Partners L.P. LNG provides liquefied natural gas (LNG), liquefied petroleum gas (LPG) and crude oil marine transportation services under long-term, fixed-rate time-charter contracts with major energy and utility companies through its current fleet of 15 LNG carriers, three LPG carriers and eight Suezmax crude oil tankers. In addition, LNG expects to take delivery of three newbuilding LPG carriers in 2010 and Parent currently owns a 49.2 percent interest in LNG (including the two percent sole general partner interest). 3

4 Cash flow from vessel operations from LNG during the fourth quarter of increased to $60.4 million from $54.2 million in the same period of the prior year. This increase was primarily due to the delivery of the first two Skaugen LPG/Multigas carriers from subsidiaries of IM Skaugen ASA in April and November, the acquisition of a 70 percent interest in the two Tangguh LNG carriers in August and the effect of the strengthening of the Euro against the U.S. Dollar on the Partnership s Euro-denominated revenues, partially offset by a decrease in the Teide Spirit profit share (the time charter for the Teide Spirit contains a profit share component tied to spot tanker rates which is determined in the fourth quarter of each year). In addition, there was a reduction in revenue in the fourth quarter of compared to the same quarter of the prior year due to a decrease in LIBOR which affected the daily charter rates that are adjusted for changes in LIBOR under the time-charter contracts for five of the Partnership s Suezmax tankers. This reduction is offset by a corresponding decrease in net interest expense. On November 24,, LNG completed a follow-on equity offering of 3.95 million common units (including the exercised portion of the underwriters overallotment option), raising net proceeds of $91.9 million. Proceeds from the offering were used to repay amounts drawn under LNG s revolving credit facilities and for general corporate purposes. On March 2, 2010, LNG agreed to acquire from two -built Suezmax tankers and one 2007-built Handymax product tanker, and their respective long-term time-charter contracts, for a total cost of $160 million. This transaction is expected to be completed in mid-march Tankers Ltd. Tankers currently owns a fleet of nine Aframax tankers and three Suezmax tankers. Seven of the 12 vessels are currently employed on fixed-rate time charters mostly ranging from one to three years in initial duration, with the remaining vessels trading in the spot tanker market. Based on the existing fleet employment profile, approximately 55 percent of Tankers revenue days in 2010 are under fixed-rate charters. Parent currently owns a 42.2 percent interest in Tankers (including 100 percent of the outstanding Class B common shares). Cash flow from vessel operations from Tankers decreased to $14.5 million in the fourth quarter of, from $22.3 million in the same period of the prior year, primarily due to a decrease in spot tanker rates in the fourth quarter of compared to the same period of the prior year. Parent In addition to its equity ownership interests in Offshore, LNG and Tankers, directly owns a substantial fleet of vessels. As at February 28, 2010, this included 26 conventional tankers, four FPSOs, a 33 percent interest in four newbuilding LNG carriers under construction, four Aframax shuttle tanker newbuildings under construction, and one recently converted FSO unit. In addition, Parent had 34 chartered-in conventional tankers (including 10 vessels owned by its subsidiaries) and two chartered-in LNG carriers owned by LNG. For the fourth quarter of, Parent s cash flow from vessel operations decreased by $76.1 million from the same period of the prior year, primarily due to a decrease in average spot tanker rates and a decrease of 1,735 spot revenue days compared to the fourth quarter of Revenue days represent the total number of vessel calendar days less off-hire associated with major repairs, drydockings, or mandated surveys. In addition, Parent s fourth quarter cash flow from vessel operations was lower due to the sale of the Petrojarl Varg FPSO unit to Offshore in September. The decrease in cash flow from vessel operations from Parent was partially offset by lower time-charter hire expense and reduced operating and overhead expenses as a result of cost reduction initiatives. 4

5 Tanker Market During the latter part of the fourth quarter, spot tanker rates recovered from the multi-year lows of the previous quarter as a result of increased global oil demand, rising supply from both OPEC and non-opec sources, seasonal factors such as weather-related vessel delays and an increase in the use of conventional tankers for floating storage volumes, which tightened active fleet supply. Spot tanker rates remained strong during the first few weeks of 2010 largely due to severe winter weather conditions in the Northern Hemisphere which led to increased oil demand and caused weather-related delays. Subsequently, spot tanker rates have softened in late January and February due to easing seasonal factors and an increase in available fleet capacity as a result of a reduction in global floating storage volumes. In January 2010, the International Monetary Fund (IMF) raised its global GDP growth forecast for 2010 to 3.9 percent from 3.1 percent. The upward adjustment is a result of indications of a stronger and faster recovery of the global economy than was previously anticipated. The International Energy Agency (IEA) has forecasted that global oil demand in 2010 will average 86.5 million barrels per day (mb/d) which represents a 1.6 mb/d (or 1.8 percent) increase from when global oil demand contracted by 1.5 percent compared to the prior year. In, the world tanker fleet grew by 7.3 percent as approximately 48 million deadweight tonnes (mdwt) of new capacity joined the worldwide fleet and approximately 19 mdwt was removed through scrapping or conversion for other uses. The tanker newbuilding delivery profile for 2010 is similar to. However, there is potential for an increase in scrapping due to the International Maritime Organization (IMO) targeted phase-out of single hull tankers which could have a dampening effect on tanker supply and lead to lower fleet growth in 2010 compared to the prior year. 5

6 s Spot and Short-Term Time-Charter Tanker Fleet Performance The following table highlights the consolidated operating performance of the Company s conventional spot tanker pools and period out-charters with an initial term of between one and three years, measured in net revenues per revenue day or time-charter equivalent (TCE) rates, in addition to average daily in-charter rates and total in-charter days for each respective period: Three Months Ended September 30, 2008 Suezmax Gemini Suezmax Pool average spot TCE rate (1) $21,109 $14,878 $47,173 Spot revenue days (2) Average time-charter out rate (3)(4) 1,084 $26,971 1,074 $35, $23,084 Time-charter revenue days Average in-charter rate $28,604 $28,524 $31,954 In-charter days Aframax Aframax Pool average spot TCE rate (1)(5) $13,963 $9,005 $33,596 Spot revenue days (2) Average time-charter rate (3) 2,202 $29,543 2,473 $32,165 3,885 $32,196 Time-charter revenue days Average in-charter rate $20,629 $22,365 $28,503 In-charter days 1,602 1,971 3,027 LR2 Taurus LR2 Pool average spot TCE rate (1) $15,448 $15,737 $49,644 Spot revenue days (2) Average time-charter rate (3) 368 $18, $18, $30,264 Time-charter revenue days Average in-charter rate $19,000 $19,082 $19,097 In-charter days MR MR product tanker average spot TCE rate (1) $9,746 $10,548 $22,350 Spot revenue days (2) Average product tanker time-charter rate (3) 108 $20, $24, $26,405 Time-charter revenue days Average in-charter rate $22,386 $19,231 $22,653 In-charter days (1) Average spot rates include short-term time-charters and fixed-rate contracts of affreightment that are initially under a year in duration and third-party vessels trading in the pools, but exclude vessels greater than 15 years old. (2) Spot revenue days include total owned and in-chartered vessels in the consolidated fleet but exclude commercially managed vessels (of third parties) in the pools. (3) Average time-charter rates include realized gains and losses of synthetic time-charters and forward freight agreements (FFAs), short-term timecharters, and fixed-rate contracts of affreightment that are initially between one and three years in duration. (4) Average Suezmax time-charter rates exclude the cost of spot in-chartering vessels for contract of affreightment cargoes. (5) Including items outside of the pool (vessels greater than 15 years old and realized results of bunker hedging and FFAs), the average Aframax spot TCE rate was $13,244 per day, $10,185 per day and $32,482 per day during the three months ended, September 30, and 2008, respectively. 6

7 Fleet List In late-january 2010, Parent sold one of its older Aframax tankers for $10.3 million. As at February 28, 2010, s consolidated fleet consisted of 155 vessels, including chartered-in vessels, newbuildings under construction but excluding vessels managed for third parties, as summarized in the following table: Number of Vessels (1) Owned Vessels Chartered-in Vessels Newbuildings Total Parent Fleet (2) Spot-rate: Aframax Tankers (3) Suezmax Tankers LR2 Product Tankers Total Parent Spot Fleet Fixed-rate: Aframax Tankers (3) Suezmax Tankers VLCC Tankers MR Product Tankers LNG Carriers (4) Shuttle Tankers FPSO Units FSO Units Total Parent Fixed-rate Fleet Total Parent Fleet Offshore Fleet (5)(6) LNG Fleet Tankers Fleet Total Consolidated Fleet (1) Excludes vessels managed on behalf of third parties. (2) Excludes the fleet of OPCO, which is owned 51 percent by Offshore and 49 percent by Parent. All of OPCO s 48 vessels are included within the Offshore fleet. (3) Excludes nine vessels chartered-in from Offshore Partners and one vessel chartered-in from Tankers. (4) Excludes two LNG carriers chartered-in from LNG. (5) Includes five shuttle tankers in which Offshore s ownership is 50 percent and three shuttle tankers in which Offshore s ownership is 67 percent. (6) Includes one FSO in which Offshore s ownership is 89 percent. 7

8 Liquidity and Capital Expenditures As at, had consolidated liquidity of $1.9 billion, consisting of $422.5 million cash and $1.5 billion of undrawn revolving credit facilities, of which $1.0 billion, consisting of $207.8 million cash and $815.9 million of undrawn revolving credit facilities is attributable to Parent. In January 2010, the Company completed a public offering of $450 million aggregate principal amount of senior unsecured notes due 2010, which bear interest at a rate of 8.5 percent per year. Concurrently, through a tender offer, the Company repurchased approximately $151.1 million aggregate principal amount of its outstanding percent senior unsecured notes due July 2011 at an average price of percent of their principal amount. Giving pro forma effect to the note offering and tender offer as if they had occurred on, s total consolidated liquidity would have been $2.1 billion as of that date of which $1.2 billion would have been attributable to Parent. Including pre-arranged newbuilding financing of $710 million, s current total consolidated liquidity is approximately $2.8 billion. The Company s remaining capital commitments relating to its portion of newbuildings were as follows as at December 31, : (in millions) Total Offshore LNG $ $70 Tankers Parent $279 $309 $45 - $633 Total Corporation Consolidated $349 $309 $45 $- $703 As indicated above, the Company had total capital expenditure commitments of approximately $703 million remaining as at, for which all financing has been pre-arranged. About Corporation transports approximately 10 percent of the world s seaborne oil, has built a significant presence in the liquefied natural gas shipping sector through its publicly-listed subsidiary, LNG Partners L.P. (NYSE: TGP), is further growing its operations in the offshore oil production, storage and transportation sector through its publiclylisted subsidiary, Offshore Partners L.P. (NYSE: TOO), and continues to expand its conventional tanker business through its publicly-listed subsidiary, Tankers Ltd. (NYSE: TNK). With a fleet of 155 vessels, offices in 16 countries and approximately 6,300 seagoing and shore-based employees, provides a comprehensive set of marine services to the world s leading oil and gas companies, helping them seamlessly link their upstream energy production to their downstream processing operations. s reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company. s common stock is listed on the New York Stock Exchange where it trades under the symbol TK. For Investor Relations enquiries contact: Kent Alekson Tel: +1 (604) For Media enquiries contact: Alana Duffy Tel: +1 (604) Web site: 8

9 SUMMARY CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands of U.S. dollars, except share and per share data) Three Months Ended Twelve Months Ended September 30, REVENUES (1) 517, , ,320 2,167,149 3,229,443 OPERATING EXPENSES Voyage expenses (1) 68,838 71, , , ,388 Vessel operating expenses (1)(2) 164, , , , ,948 Time-charter hire expense 81,078 94, , , ,089 Depreciation and amortization 114, , , , ,802 General and administrative (1)(2) 56,410 52,238 55, , ,570 Loss (gain) on sale of vessels and equipment, net of write-downs 21, (10,554) 12,629 (50,267) Goodwill impairment charge - 330, ,165 Restructuring charges 2,427 1,456 4,449 14,444 15, , ,785 1,008,928 2,001,316 2,969,324 Income (loss) from vessel operations 7,972 24,583 (211,608) 165, ,119 OTHER ITEMS Interest expense (1) (29,943) (30,035) (77,457) (141,448) (292,596) Interest income (1) 4,105 4,193 23,703 19,999 97,111 Realized and unrealized gain (loss) on derivative instruments (1) 56,980 (121,664) (447,373) 140,046 (565,411) Income tax (expense) recovery (6,715) (10,904) 23,132 (18,889) 56,176 Equity income (loss) from joint ventures (1) 11,843 (8,945) (25,305) 41,700 (36,085) Foreign exchange gain (loss) 8,978 (26,047) 23,908 (30,922) 24,727 Other income (loss) net 3,542 2,938 (1,899) 12,961 (3,935) Net income (loss) (3) 56,762 (165,881) (692,899) 189,280 (459,894) Less: Net (income) loss attributable to non-controlling interests (40,898) 23,633 42,026 (74,800) (9,561) Net income (loss) attributable to stockholders of Corporation 15,864 (142,248) (650,873) 114,480 (469,455) Earnings (loss) per common share of - Basic - Diluted Weighted-average number of common shares outstanding - Basic - Diluted $0.22 $ ,590,677 73,599,706 $(1.96) $(1.96) 72,553,809 72,553,809 $(8.98) $(8.98) 72,467,924 72,467,924 $1.58 $ ,549,361 73,058,831 $(6.48) $(6.48) 72,493,429 72,493,429 (1) Commencing in and applied retroactively, the realized and unrealized gains and losses related to derivative instruments that are not designated as hedges for accounting purposes have been reclassified to a separate line item in the statements of income (loss). The realized gains (losses) relate to the amounts the Company actually received or paid to settle such derivative instruments and the unrealized gains (losses) relate to the change in fair value of such derivative instruments, as detailed in the table below: 9

10 Three Months Ended September 30, 2008 Twelve Months Ended 2008 Realized (losses) gains relating to: Interest rate swaps (36,199) (41,321) (9,925) (127,936) (38,286) Foreign currency forward contracts Vessel operating expenses (136) (926) (1,216) (6,826) 13,760 General and administrative expenses 78 (55) (1,171) (2,158) 8,485 Voyage expenses and other - - (526) - 12,745 Bunkers, FFAs and other (5,953) 2,655 (7,623) (1,293) (32,971) (42,210) (39,647) (20,461) (138,213) (36,267) Unrealized gains (losses) relating to: Interest rate swaps 94,377 (81,114) (432,066) 258,710 (487,546) Foreign currency forward contracts (430) 2,060 (13,753) 14,797 (45,728) Bunkers, FFAs and other 5,243 (2,963) 18,907 4,752 4,130 99,190 (82,017) (426,912) 278,259 (529,144) Total realized and unrealized gains (losses) on nondesignated derivative instruments 56,980 (121,664) (447,373) 140,046 (565,411) In addition, equity income (loss) from joint ventures includes net unrealized gains (losses) from non-designated interest rate swaps held within the joint ventures of $11.8 million, $(10.2) million and $(30.4) million for the three months ended, September 30,, and 2008, respectively, and $32.4 million and $(33.0) million for the twelve months ended and 2008, respectively. (2) The Company has entered into foreign currency forward contracts, which are economic hedges of vessel operating expenses and general and administrative expenses. Certain of these forward contracts have been designated as cash flow hedges pursuant to United States GAAP. Unrealized gains (losses) arising from hedge ineffectiveness from such forward contracts are reflected in vessel operating expenses and general and administrative expenses in the above Statements of Income (Loss), as detailed in the table below: Three Months Ended Twelve Months Ended September 30, Vessel operating expenses (520) 2,979 (9,015) 9,155 (5,054) General and administrative (544) 2,615 (4,667) 5,760 (3,271) (3) Commencing in and applied retroactively, the Company s net income (loss) includes income attributable to non-controlling interests. 10

11 SUMMARY CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars) As at As at September 30, As at 2008 ASSETS Cash and cash equivalents 422, , ,165 Other current assets 342, , ,829 Restricted cash current 36,068 37,845 35,841 Restricted cash long-term 579, , ,715 Vessels held for sale 10,250 34,637 69,649 Vessels and equipment 6,622,534 6,694,688 6,713,392 Advances on newbuilding contracts 213, , ,702 Derivative assets 48,115 85, ,326 Investment in joint ventures 129, , ,956 Investment in direct financing leases 507, ,489 79,508 Other assets 171, , ,959 Intangible assets 213, , ,768 Goodwill 203, , ,191 Total Assets 9,500,419 9,662,233 10,215,001 LIABILITIES AND EQUITY Accounts payable and accrued liabilities 389, , ,084 Other current liabilities 1,294 1,990 22,255 Current portion of long-term debt 272, , ,659 Long-term debt 4,931,216 4,991,302 5,377,474 Derivative liabilities 359, , ,265 In process revenue contracts 244, , ,865 Other long-term liabilities 227, , ,994 Equity: Non-controlling interests (1) 849, , ,938 Stockholders of 2,226,158 2,198,417 2,068,467 Total Liabilities and Equity 9,500,419 9,662,233 10,215,001 (1) Effective January 1,, amended the accounting and reporting for non-controlling interest, which is now classified as a component of equity. 11

12 SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of U.S. dollars) Year Ended 2008 Cash and cash equivalents provided by (used for) OPERATING ACTIVITIES Net operating cash flow 338, ,641 FINANCING ACTIVITIES Net proceeds from long-term debt 1,182,941 2,226,628 Scheduled repayments of long-term debt (217,703) (365,850) Prepayments of long-term debt (1,583,852) (1,306,309) Decrease in restricted cash 38,953 23,955 Repurchase of common stock - (20,512) Net proceeds from the public offerings of LNG 158, ,345 Net proceeds from the public offering of Offshore 102, ,484 Net proceeds from the public offering of Tankers 65,556 - Cash dividends paid (91,747) (82,877) Distribution from subsidiaries to non-controlling interests (109,942) (91,794) Other 2,007 3,014 Net financing cash flow (452,782) 676,084 INVESTING ACTIVITIES Expenditures for vessels and equipment (495,214) (716,765) Proceeds from sale of vessels and equipment 219, ,611 Purchase of marketable securities - (542) Proceeds from sale of marketable securities - 11,058 Proceeds from sale of interest in Swift Product Tanker Pool - 44,377 Purchase of Petrojarl ASA - (304,949) Net loans to joint ventures (1,369) (229,940) Other (221) 36,917 Net investing cash flow (276,970) (828,233) (Decrease) increase in cash and cash equivalents (391,655) 371,492 Cash and cash equivalents, beginning of the year 814, ,673 Cash and cash equivalents, end of the year 422, ,165 12

13 APPENDIX A SPECIFIC ITEMS AFFECTING NET INCOME (in thousands of U.S. dollars, except per share data) Set forth below is a reconciliation of the Company s unaudited adjusted net loss attributable to stockholders of, a non- GAAP financial measure, to net income and net income attributable to stockholders of as determined in accordance with GAAP, adjusted for some of the significant items of income and expense that affected the Company s net income for the three and twelve months ended, all of which items are typically excluded by securities analysts in their published estimates of the Company s financial results: Three Months Ended Twelve Months Ended $ Per $ Per $ Share (1) $ Share (1) Net income GAAP basis 56, ,280 Adjust for: Net income attributable to non-controlling interests (40,898) (74,800) Net income attributable to stockholders of 15, , Add (subtract) specific items affecting net income: Unrealized gains from derivative instruments (2) (109,908) (1.49) (328,029) (4.49) Foreign currency exchange (gains) losses (3) (8,978) (0.12) 30, Restructuring charge (4) 2, , Loss on sale of vessels and equipment and asset impairments (5) 28, , Non-recurring adjustments to tax accruals and deferred income tax expense on unrealized foreign exchange (losses) gains 15, , Other (6) 6, , Non-controlling interests share of items above 17, , Total adjustments (49,121) (0.67) (201,964) (2.77) Adjusted net loss attributable to stockholders of (33,257) (0.45) (87,484) (1.20) (1) Fully diluted per share amounts. (2) Reflects the unrealized gains or losses relating to the change in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes, including those included in equity income (loss) from joint ventures, and the ineffective portion of foreign currency forward contracts designated as hedges for accounting purposes. (3) Foreign currency exchange (gains) losses primarily relate to the Company s debt denominated in Euros and deferred tax liability denominated in Norwegian Kroner. Nearly all of the Company s foreign currency exchange gains and losses are unrealized. (4) Restructuring charges relate to the reorganization of certain of the Company s operational functions and the re-flagging of certain of the Company s shuttle tankers. (5) Primarily relates to loss (gain) on sale of vessels and equipment, write-downs of vessels and equipment, write-downs of intangible assets, impairment on investment in joint venture and adjustment to the carrying value of two shuttle tankers. (6) Primarily relates to realized loss on early termination of interest rate swap agreement, realized loss on embedded derivative settlement and loss on bond repurchase (8.875 percent notes due 2011). 13

14 APPENDIX A SPECIFIC ITEMS AFFECTING NET LOSS (in thousands of U.S. dollars, except per share data) Set forth below is a reconciliation of the Company s unaudited adjusted net income attributable to stockholders of, a non- GAAP financial measure, to net loss and net loss attributable to stockholders of as determined in accordance with GAAP, adjusted for some of the significant items of income and expense that affected the Company s net loss for the three and twelve months ended 2008, all of which items are typically excluded by securities analysts in their published estimates of the Company s financial results: Three Months Ended Twelve Months Ended $ Per $ Per $ Share (1) $ Share (1) Net loss GAAP basis (692,899) (459,894) Adjust for: Net loss (income) attributable to non-controlling interests 42,026 (9,561) Net loss attributable to stockholders of (650,873) (8.98) (469,455) (6.48) Add (subtract) specific items affecting net income: Unrealized losses from derivative instruments (2) 469, , Foreign currency exchange gains (3) (22,290) (0.31) (24,844) (0.35) Deferred income tax expense on unrealized foreign exchange losses (4) (14,181) (0.20) (22,343) (0.31) Restructuring charge (5) 4, , Gain on sale of vessels and equipment, net of asset impairments (6) (10,553) (0.15) (50,266) (0.69) Goodwill impairment 330, , Net effect from non-cash changes in purchase price allocation for the acquisitions of 50 percent of OMI Corporation and , Petrojarl ASA (7) Change in long-term incentive plan accruals (8) - - (22,606) (0.31) Write-down of marketable securities 6, , Other (9) , Non-controlling interests share of items above (61,036) (0.84) (63,429) (0.87) Total adjustments 704, , Adjusted net income attributable to stockholders of 53, , (1) Fully diluted per share amounts. (2) Reflects the unrealized gains or losses relating to the change in the mark-to-market value of derivative instruments that are not designated as hedges for accounting purposes, including those included in equity income (loss) from joint ventures, and the ineffective portion of foreign currency forward contracts designated as hedges for accounting purposes. (3) Foreign currency exchange gains primarily relate to the Company s debt denominated in Euros and deferred tax liability denominated in Norwegian Kroner. Nearly all of the Company s foreign currency exchange gains and losses are unrealized. (4) Primarily due to deferred income tax related to unrealized foreign exchange gains and losses. (5) Restructuring charges relate to the reorganization of certain of the Company s operational functions. (6) Primarily relates to gain on sale of vessels and equipment, write-downs of vessels and equipment, and write-downs of intangible assets. (7) Primarily relates to changes in amortization of intangible assets as a result of adjustments to the purchase price allocation of OMI Corporation and amortization of in-process revenue contracts as a result of adjustments to the purchase price allocation of Petrojarl ASA. (8) Relates to changes in accruals relating to the Company s long-term incentive plan which is linked to the Company s share price. Amounts are included in general and administrative expenses. (9) Primarily relates to losses on bond repurchases (8.875 percent notes due 2011), a change in non-cash deferred tax balances, and settlement of a previous claim against OMI Corporation. 14

15 APPENDIX B SUPPLEMENTAL FINANCIAL INFORMATION SUMMARY BALANCE SHEET AT DECEMBER 31, (in thousands of U.S. dollars) Consolidation Offshore LNG Tankers Parent Adjustments Total ASSETS Cash and cash equivalents 101, ,570 10, , ,510 Other current assets 102,311 14,602 12, , ,194 Restricted cash (current & noncurrent) - 611,520-3, ,311 Vessels and equipment 1,917,248 1,817, ,309 2,381,627-6,622,534 Advances on newbuilding contracts - 57, , ,408 Derivative assets 8,347 32,131-7,637-48,115 Investment in joint ventures - 81,132-48, ,248 Investment in direct financing leases 56, ,541-34, ,512 Other assets 20,226 25,561 3, , ,526 Advances to affiliates 17,673 20, (38,610) - - Equity investment in subsidiaries ,204,518 (1,204,518) - Intangibles and goodwill 163, ,307 6,761 77, ,061 TOTAL ASSETS 2,387,811 3,347, ,963 4,429,305 (1,204,518) 9,500,419 LIABILITIES AND EQUITY Accounts payable and accrued liabilities 73,698 52,210 13, , ,132 Other current liabilities - 1, ,294 Advances from affiliates 99, ,104 - (210,980) - - Current portion of long-term debt 108, ,697 3,600 52, ,225 Long-term debt 1,567,455 2,025, ,628 1,036,488-4,931,216 Derivative liabilities 70, ,006 13, , ,479 In-process revenue contracts , ,360 Other long-term liabilities 34,920 56, , ,540 Equity: Non-controlling interests (1) 44,297 4, , ,015 Equity attributable to stockholders/ unitholders of publicly-listed entities 389, , ,271 2,779,810 (2,003,759) 2,226,158 TOTAL LIABILITIES AND EQUITY 2,387,811 3,347, ,963 4,429,305 (1,204,518) 9,500,419 NET DEBT (2) 1,573,867 1,419, , ,705-4,165,620 (1) Non-controlling interests in the Offshore and LNG columns represent the joint venture partners share of joint venture net assets. Noncontrolling interest in the Consolidation Adjustments column represents the public s share of the net assets of s publicly-traded subsidiaries. Commencing in, non-controlling interest is included as a component of equity. (2) Net debt represents current and long-term debt less cash and, if applicable, current and long-term restricted cash. 15

16 APPENDIX B SUPPLEMENTAL FINANCIAL INFORMATION SUMMARY STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, (in thousands of U.S. dollars) Consolidation Offshore LNG Tankers Parent Adjustments Total Voyage revenues 213,396 85,549 25, ,447 (49,586) 517,757 Voyage expenses 34, ,523 (5,449) 68,838 Vessel operating expenses 61,642 20,837 9,244 72, ,218 Time-charter hire expense 28, ,074 (44,137) 81,078 Depreciation and amortization 44,984 20,010 7,493 42, ,975 General and administrative 15,876 5,599 1,455 33,480-56,410 Loss on sale of vessels and equipment, net of write-downs ,839-21,839 Restructuring charge ,275-2,427 Total operating expenses 186,219 47,062 18, ,174 (49,586) 509,785 Income (loss) from vessel operations 27,177 38,487 7,035 (64,727) - 7,972 Net interest expense (9,649) (9,636) (1,145) (5,408) - (25,838) Realized and unrealized loss on derivative instruments 15, ,031 38,579-56,980 Income tax (expense) recovery 14,290 (1,137) - (19,868) - (6,715) Equity loss from joint ventures - 5,591-6,252-11,843 Equity in earnings of subsidiaries (1) ,034 (39,034) - Foreign exchange loss 1,837 8,675 (5) (1,529) - 8,978 Other net 1, ,083-3,542 Net (loss) income 51,362 43,102 7,916 (6,584) (39,034) 56,762 Less: Net loss (income) attributable to non-controlling interests (2) (1,820) (3,377) (35,809) (40,898) Net (loss) income attributable to stockholders/unitholders of publicly-listed entities 49,542 39,725 7,916 (6,476) (74,843) 15,864 CASH FLOW FROM VESSEL OPERATIONS (3) 73,230 60,392 14,528 (18,740) (4) - 129,410 (1) Corporation s proportionate share of the net earnings of its publicly-traded subsidiaries. (2) Net (income) loss attributable to non-controlling interests in the Offshore and LNG columns represent the joint venture partners share of the net income (loss) of the respective joint ventures. Net (income) loss attributable to non-controlling interest in the Consolidation Adjustments column represents the public s share of the net income (loss) of s publicly-traded subsidiaries. Commencing in, the Company s net income (loss) includes income (loss) attributable to non-controlling interests. (3) Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, vessel/goodwill write-downs, gains or losses on the sale of vessels and unrealized gains and losses relating to derivatives, but includes realized gains and losses on the settlement of foreign currency forward contracts. Cash flow from vessel operations is a non-gaap financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company s Web site at for a reconciliation of this non-gaap financial measure as used in this release to the most directly comparable GAAP financial measure. (4) In addition to Parent s cash flow from vessel operations, Parent also received dividends/distributions from the daughter public companies of $42.3 million for the three months ended. The dividends/distributions received by Parent include those with respect to its general partner interests in Offshore and LNG and its 49% interest in Offshore Operating L.P. which is controlled by Offshore. 16

17 APPENDIX B SUPPLEMENTAL FINANCIAL INFORMATION SUMMARY STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, (in thousands of U.S. dollars) Consolidation Offshore LNG Tankers Parent Adjustments Total Voyage revenues 821, , ,303 1,111,091 (200,230) 2,167,149 Voyage expenses 111,026 1,902 3, ,584 (24,527) 294,091 Vessel operating expenses 233,261 76,882 33, , ,517 Time-charter hire expense 117, ,822 (175,703) 429,321 Depreciation and amortization 166,350 78,397 28, , ,831 General and administrative 58,016 18,162 6, , ,483 Gain on sale of vessels and equipment, net of write-downs ,629-12,629 Restructuring charge 5,008 3,250-6,186-14,444 Total operating expenses 690, ,593 71,681 1,260,409 (200,230) 2,001,316 Income (loss) from vessel operations 130, ,536 41,622 (149,318) - 165,833 Net interest expense (42,083) (45,408) (6,942) (27,016) - (121,449) Realized and unrealized gain (loss) on derivative instruments 53,560 (40,950) 4, , ,046 Income tax (expense) recovery (12,638) (694) - (5,557) - (18,889) Equity income (loss) from joint ventures - 17,098-24,602-41,700 Equity in earnings of subsidiaries (1) ,038 (146,038) - Foreign exchange loss (6,151) (10,835) (56) (13,880) - (30,922) Other net 8, ,651-12,961 Net income (loss) 132,599 62,139 38, ,646 (146,038) 189,280 Less: Net (income) loss attributable to non-controlling interests (2) (7,413) (1,969) (65,689) (74,800) Net income (loss) attributable to stockholders/unitholders of publicly-listed entities 125,186 60,170 38, ,917 (211,727) 114,480 CASH FLOW FROM VESSEL OPERATIONS (3) 253, ,247 65,170 (8,398) (4) - 526,240 (1) Corporation s proportionate share of the net earnings of its publicly-traded subsidiaries. (2) Net (income) loss attributable to non-controlling interests in the Offshore and LNG columns represent the joint venture partners share of the net income (loss) of the respective joint ventures. Net (income) loss attributable to non-controlling interest in the Consolidation Adjustments column represents the public s share of the net income (loss) of s publicly-traded subsidiaries. Commencing in, the Company s net income (loss) includes income (loss) attributable to non-controlling interests. (3) Cash flow from vessel operations represents income from vessel operations before depreciation and amortization expense, vessel/goodwill writedowns, gains or losses on the sale of vessels and unrealized gains and losses relating to derivatives, but includes realized gains and losses on the settlement of foreign currency forward contracts. Cash flow from vessel operations is a non-gaap financial measure used by certain investors to measure the financial performance of shipping companies. Please see the Company s Web site at for a reconciliation of this non- GAAP financial measure as used in this release to the most directly comparable GAAP financial measure. (4) In addition to Parent s cash flow from vessel operations, Parent also received dividends/distributions from the daughter public companies of $176.3 million for the year ended. The dividends/distributions received by Parent include those with respect to its general partner interests in Offshore and LNG and its 49% interest in Offshore Operating L.P., which is controlled by Offshore. 17

18 FORWARD LOOKING STATEMENTS This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management s current views with respect to certain future events and performance, including statements regarding: tanker market fundamentals, including the balance of supply and demand in the tanker market, and spot tanker charter rates; the Company s financial strength, including the stability of its cash flows, the proportion of its total cash flows contributed from its fixed-rate businesses, its liquidity position, and debt maturity profile; upside potential from the Company s exposure to the spot market; the Company s future capital expenditure commitments and the financing requirements for such commitments; the impact on the Company s profitability through cost reductions and revenue improvements; the impact on the Company s financial leverage and flexibility resulting from its strategy of selling assets to its public company subsidiaries, LNG, Offshore and Tankers; and increased revenue from the offshore segment. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in production of or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of tanker newbuilding orders or greater or less than anticipated rates of tanker scrapping; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSOs and FPSOs; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts; changes affecting the offshore tanker market; shipyard production delays; changes in the Company s expenses; the Company s future capital expenditure requirements; the inability of the Company to complete vessel sale transactions to its public company subsidiaries or to third parties; conditions in the United States capital markets; and other factors discussed in s filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based end -